1. What are my rights to compensation if my tenant breaks the lease and moves out early?
If a tenant vacates your rental unit prior to lease expiration in contravention of the lease, you have the right to deem the tenant in breach of contract. You then have the obligation to mitigate your damages. If, for example, a tenant on a one-year lease moves out after only six months, you are entitled to collect the following damages:
- Expectation damages, i.e., the same rent as the vacating tenant was paying for the remaining six months. If the highest rent you can get is $200 less than the lease breaker was paying, you would incur 6 x 200 = $1,200 in damages, for which the tenant is liable.
- Lost rent: assuming you are taking all reasonable steps to re-rent the unit, the tenant is also responsible for the lost rent until your vacancy is filled.
- Additional expenses: You may incur other costs to re-rent the unit: advertising, reasonable payment to a rental agent, or lock re-keying costs. The tenant is also responsible for these expenses.
In most cases, a prematurely-vacated apartment in San Francisco is easy to re-rent, and most owners are willing to work with a tenant who has a serious, unanticipated reason to move out suddenly. So in practice, it’s often easier to just absorb the costs and move on.
But whatever you decide to do, know what you’re entitled to, and don’t let yourself be taken advantage of.
2. If my tenant breaks the lease, may I use the security deposit to satisfy her liability to me for damages listed in question 1 above?
Yes. You are entitled to use the tenant’s security deposit to cover damages relating to the breach, even if the security deposit covers only a portion of the damages. The balance may then be sought in Small Claims Court. You should document the damages and the
proper deductions in order to ensure that there is no confusion as to how you are accounting for your debits to the security deposit.
3. If it takes more than three weeks to re-rent the unit, does the 21-day security deposit return rule still apply?
You must provide an accounting of the security deposit within 21 days, but you may still inform the tenant that your are “holding” the security deposit balance to remedy
anticipated damages arising from the continuing breach. This would arise if you intend to collect for lost rent in a case where it takes you more than 21 days to re-rent the unit. Consult an attorney if you confront this issue in order to ensure that there is no failure on
your part in documenting the security deposit usage.
4. The state Costa-Hawkins law exempts condos from rent control, even those in San Francisco built before 1979. Are there any exceptions?
Yes. Although a condominium is considered legally a single family dwelling, and Costa-Hawkins exempts all such dwellings from the price controls of the City’s Rent Control Ordinance, a condominium is exempt only if it has been sold separately by the sub-divider to a bona fide purchaser (CA Civil Code §1954.52(a)(3)(B)(ii)). In other words, if you condo-converted your pre-1979 building and own the condominium in question, that
unit is still subject to rent control. If you subsequently sell it, and the new owner rents it out, the unit will be exempt from rent control.
5. I collected screening fees from several rental applicants, but actually screened only two. Must I refund the other applicants’ fees?
Yes. Under current California law, you may charge an applicant up to $44.00 as a screening fee, whether or not the applicant is ultimately approved. However, if you collected the fee but then chose not to go ahead with the screening process, you must refund that applicant’s fee in full.
6. One of my tenants wants to move in her boyfriend as her roommate. Is it better for me to put him on the lease as a co-tenant or leave him off the lease as a sub-tenant?
For both you and the master tenant, its better that the new roommate remain off the lease (as a subtenant). For your master tenant it’s good because she can lawfully evict her boyfriend if the relationship doesn’t work out, something she couldn’t do if he were a cotenant. And for you as the owner it’s better because in the event that she moves out and her boyfriend decides to stay, you can either evict him or increase his rent to market rate.
7. My tenant gave notice and asked for a move-out inspection. I did the inspection with her the day before she vacated, and found numerous defects. I carefully documented the damage, and deducted my repair costs from her security deposit. Now she is threatening to sue. Did I do something wrong?
Yes. Many rental property owners don’t know when and how to conduct a proper pre-departure inspection. Avoid a Small Claims Court summons by knowing the law: CA Civil Code Section 1950.5(f). Its purpose is to give a vacating tenant the opportunity to keep her security deposit by correcting issues that come to light in the pre-departure inspection. A final inspection on the last day of tenancy is still a good idea, but alone
doesn’t pass legal muster, because at that point the tenant can no longer correct the defects you’ve cited. Section 1950.5(f) requires that she be given written notice of her right to a joint pre-departure inspection two weeks prior to her move-out date. Unless she waives that right, you must schedule a mutually acceptable date, or give 48-hours written notice of the date for the inspection, which you can then conduct whether or not
she is present. After the inspection, you must give her a written itemization of all defects you plan to charge against her deposit as well as a copy of the actual language of Section 1950.5(f)(1) through (4). In this way, she knows the exact procedures, and understands her right to correct the defects prior to surrendering possession of the unit.
8. I’d like to remodel an old bathroom in my rental unit, but the tenant says its fine, and doesn’t want the disruption of a renovation. Can I go ahead with the remodel anyway?
That depends. Unless the tenant consents, or you can show conclusively that the work you plan to do is required in order to correct actual code violations or health and safety issues, you may not proceed with the remodeling work.
Reprinted with permission of the Small Property Owners of San Francisco Institute (SPOSFI) News. For more information on becoming a member of SPOSFI or to send a tax-deductible donation, please visit their website at www.smallprop.org or call (415) 647-2419.